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Sunday, 28 April 2013

South Met. Gas. The Co-partnership Scheme Part 1

'We humbly submit that if
no idea was entertained by you. of 'breaking our
union a more successful

scheme was never
promulgated to accomplish suchan unintentional result'.

So said Mark
Hutchins,Chairman of the Gas Workers
Union, about the profit sharing scheme
set up by Livesey.At this stage perhaps, the scheme itself
should be explained and the objections to it examined.Why did George Livesey think that it would both answer his
aspirations for the South Met. and at the same time destroy the Gas
Workers Union?

The 1894 Report to the
Board of Trade onProfit Sharing gives a detailed description of
the scheme as it was originally proposed - a few
amendments were made during the period between the announcement of the
scheme and its implementation these will be discussed later.

The bonuswas paid in exactly the same way as the
shareholders' dividend under the sliding
scale.It gas based on a relationship to the price of gas.When the price of gas was not above a base price (in 1889 3/6 per
1,000 cubic feet) the shareholders received a dividend of 10 and this
dividend was lower if the price of gas 'rose.In the same way the employees received a
dividend of on a year's wages for
every 1d. the price of gas fell below a base price of
2/8d. (the actual price of gas charged by South Met. in 1889 was
2/3d. per 1,000).

All those who had signed
the agreement within the first three months weregiven a 'nest egg' - that is a sum of money
equal to the amount that they
would have had had the scheme been running for the past three
years, plus 4% interest. In order to get both bonus
and nest egg, workers had to sign an agreement to work for
the Company for twelve months at the current rate of
wages' the Company guaranteeing that these wages would not be altered
in that time to the disadvantage of the men.The nest-egg and half of the bonus was not to
be withdrawn and spent by the
men for a period.This period of time was to be the subject
of subsequent discussions between the Company and the newly
formed Profit Sharing Committee. Exceptions would be made
in the case of death or retirement but it was to be totally
forfeit in the case of strike or 'wilful injury'.

In this way the workforce was linked into
the sliding scale in the way that Livesey had suggested
fifteen years earlier. It immediately gave an
incentive to workers to lower the price of gas.Livesey had said in 1882 that 'if they were to get the
men to work heartily and thoroughly the men
must have the motiveof self interest'. He felt that if this
motive could be brought to bear on all who had any influence on
the prosperity of the Company 'it would be a good thing'.

In his address to the
professional gas institute in 1882 Thomas Travers had
suggested two ways in which workmen could influence the Company so
that the price of gas might be lowered - they could watch
every outlet of waste and 'constant effort would be made by
all to popularise and extend the

consumption of gas'.Indeed the most immediate impact of the scheme, according to
pronouncements made by Livesey, were the instances of workmen
adapting existing practicesin order to save the Company
money.Prizes and awards were instituted whereby members of the
workforce were encouraged to act as salesmen for the Company
not only for gas but also for appliances - a sales effort directed
at the growing working class custom in South London.

It is very difficult to
discover how far this scheme is a replica of the one set up
in 1886 for the Officers of the Company.The Minute Books merely say: ' that in the event of the
profit on the years'

working being sufficient
after paying interest on the debentures and
bonds to pay a dividend of not less than 14% on
capital for the year ... a bonus on the
following scale will be paid'. Although alterations were
made to the scheme in successive years, it is not clear if
it was overtly tied to the sliding scale.It is most probable that Livesey had not
managed to get the Board to
completely agree to the whole workings of the scheme.

As indicated earlier,
Livesey claimed to have thought up the whole scheme in a
quarter of an hour - but the scheme is so intricate that it
rather bears the imprint of years of gestation.

The scheme was announced
to the men in late October or November and as many as
possible were encouraged to sign agreements.On 21st November a meeting was held in the Board Room at Old Kent
Road of delegates of those workmen who had signed the
agreements.Representatives of the

Union had been invited to
attend as observers, but none came. The proceedings of the
meeting were taken down verbatim and circulated later to the
men.

The meeting began with
Livesey explaining some current difficulties in working -
of a practical nature concerning the price of coal.He talked about the threat from electricity and eventually came to the
stokers' demands.They were now asking for double time on Sundays, but
'the orange has been

squeezed dry'.He went on.. 'now the time has come
when it is necessary to have something more
than the mere labour of the worknen - we want
his interest and we wantto give him a share of the profits earned by the Company in order
to purchase that interest as well as
his labour'.

He dealt with objections
already raised and pointed out areas in which the Company was
still undecided.Some of the delegates raised points themselves
and entered into the discussions.Most

of them were on items
which worried the men; was there any way by which they could be
deprived of the bonus....were they doing the right thing in
trusting the Company in this way?

Men were afraid that small
misdemeanours might deprive them of the bonus and had been
mandated by those unable to attend to ask various questions
about this.They were also concerned to make suggestions about the
future of the scheme and point out other ways in which the
workforce might be benefitted.Henry Austin, who later became an employee director,
was moved to recite poetry - but also
to ask the Company to consider a share purchase scheme for
employees.

The major part of the
discussion concerned the agreements.Men had to sign to work for
twelve months and to remain sober, industrious and able to do
their work.They must serve in whatever capacity the Company
wanted, and obey the orders of the foreman.

Obviously the sting was
that strike action would become impossible because of the staggered
dates of notice - hence the Union's objections that 'there would be at no time
more than a few men able to take any
combined action of any kind'.

Workers were, however,
given job security through these agreements - they worked both
ways.One of the men at the
"Interview", Skinner, said: 'it appears to be a good
guarantee to me, by signing the agreement
the Company guarantee to find me
employment for the next twelve months'. Such aguarantee was a valuable thing to a weekly
paid labourer.

Many other detailed points
worried these 'loyal' workmen. Objections were raised to
the clause about obeying the orders of the foreman- suppose the foreman was acting
unfairly?Livesey answered 'it is not our policy to
support any foreman if they practise hardship
or injustice'. No doubt Livesey meant
this - but he had never worked under a foreman to know the pressures
involved.

The men persisted: 'there may be a certain
class of man who cannot satisfy the foreman
and if a man who does not like to go
tittle tattling thinks to himself that he
would like to leave ... ' If he then left in this way,
would he lose all his bonus?They were assured that all the
bonus would not be lost - a man would leave with all that was
owed to him.

Another point which
worried the men was the clause saying that they had to agree to
perform in 'whatever capacity'.That meant they could be
shifted from job to job.Suppose it was
work that a man could not do by
reason of his strength or skills - would he then be sacked.Livesey answered: 'what we would expect in
an emergency is what any of us would do
ourselves - we would lend a hand to do anything. If
a man was not suitable for one sort of
work and said 'I cannot do this or that but
I can do this and I will do it with all my
heart' - that is all we want... '.

In other words what he
wanted was 'loyalty'. This clause was objected to by the Union.
They wrote to the Company pointing out that the clause would: 'damage the Union and be
against its rules. Compelling coal porters
in time of dispute to do gas stokers work and
vice versa wouldbreak the rules of the
Unions'. Which was, of course, from
Livesey's point of view, exactly the point.

The Union continued to
point out that the Company could discharge all labourers
except the gas stokers through the slack season and 'reduce the
latter to the vacancies at reduced wages'. This point about wage
reductions should jobs be changed was brought up at the Interview.
Livesey answered: 'if a man's regular wage
is 10/- a day and he is asked to do work which is
usually paid at the rate of 5/- a day then he would
have his regular wage of 10/- and we should
give him something more. '

The Union then pointed out
another possibility: 'the agreement does not
bind the Company a rate of wages as a
class - at the date of the signing of the
agreement'. Thus, they thought, the
Company could reduce all wages at the time agreements were
re-signed.

Further discussion at the
"Interview' was focussed on the clause in the
agreements which read "the money will be
the absolute property of the men except in the
case of a strike or wilful injury to the
Company in which case it will be forfeit' . Men asked, what did
'wilful injury' mean?Did it mean

someone who 'should fall
asleep at their post as they call it in the army?'.One man, a lamplighter, quoted how he had accidentally damaged some
equipment in the course of his work - would this mean he would
lose his bonus?Livesey agreed to remove the phrase 'wilful
injury ' - the phrase meant, he explained, incidents which could be
prosecuted through the courts, they were very rare.Should a man have to prosecuted in this way
they would dismiss him, and he
could keep his bonus.

Livesey was, however, not
so accommodating in the part of the phrase concerning
strike action.Men who struck would lose both bonus and nest
egg. He was adamant in the face of protests:'we mean that he would
forfeit the whole of the money in that case
standing in his name ... we want some
protection'.

Objections were raised:
one man, Jessie Day, said "I think it would be
very hard. .. if he should lose the whole
of it'. Another said: 'If a strike turns up ...
is he to lose the whole of it because
that would not encourage the men to leave
it in. Other men explained that
the men they represented had specifically asked that
the point be raised and made clear; others that it was a
clause which was stopping many men from signing the agreements.

Livesey had asked a
lawyer. Mark Knowles, to attend and it was he who suggested
eventually: 'if it was understood that
a man on joining a strike should forfeit
what was owing to him for the last year'. Liveseythen agreed that the whole bonus need not be
forfeit in a strike - but two
years back would go.

Some changes to the
original scheme were therefore made in the face of opposition from
potential participants but money was to be kept in hand by the
Company to dissuade its owners from strike action.The nest egg was to be kept by the
Company,and the exact amountto be kept in hand was to be decided
later.Livesey had put it to the meeting; how
long did the men want it to stay in? For five years, or for
three?Many of the men said they would want their money at once,
and others that three years would be better - no one supported
five.The matter was left for the profit-sharing
committee to decide.

Men put up pleas of urgent
need for the money - for when the children were small or in
the case of long term sickness.Livesey countered all these
argumentsthe Company had always
covered extra sick payments to men
whose illness went beyond the sick pay period? they would always
lend money to men to cover unforseen emergencies; there was no
need for the accumulating bonus to be touched.Only one exception would be made 'there might be cases
where a man would like to pay a deposit on a house'. The extension of the
scheme into property investment was to become a major feature of it in
the succeeding years, as we shall see.

The Union pointed out 'it binds the labourer to
work for five years and added, more
sinisterly, that it was possible that after four and a half years of the
agreements a new and different Board might be appointed after a Board
Room coup and provoke a strike among men in order to cheat
them of their bonuses.

There were two further
points of interest in the initial draft of the scheme.One of these was the setting up of a profit sharing committee
to manage it.This was to include an equal number of
appointed management representatives and also elected delegates
from the works based on the number of workmen participating in
each workplace.The Chairman of the Company - Livesey -
was to be the Committee Chairman and to have a casting
vote.This Committee became increasingly important, as we shall
see.

Another pointer for the
future came from Henry Austin's speech requesting share
purchase facilities for workmen. It is very probable that
workmen were already buying some shares, if we are to
believe the Chairman's accusation that Livesey was promoting this
in 1875 .Livesey himself had raised this question and it is
not impossible that Austin knew Livesey's views and was putting them
forward.Livesey promised, publicly, to investigate the matter.

This then was the package
of incentives and deterrents which Livesey embodied in the
first draft of the scheme.It was a
means by which, eventually, the
workforce could be precisely controlled. The Union saw it as a
device to put them out of business -which it was.Livesey protested that he did not intend to
interfere with the Union and indeed some
men at the 'Interview' expressed their support for the principles
of 'combination'.As Livesey saw it workers were perfectly
free to give in their notices and leave South Met.'s
employment.If they did he would replace
them, individually.

The scheme was complex and
changes over the next ten years added to that
complexity.Was the manipulative
element consciously part of it in
its setting up?Did management take advantage of the
possibilities given to them as time went on?The scheme was amended and added to between
1889 and the First World War - how did
these changes affect the workforce's relations with management?

In 1889 it was argued by
the Union and by the press that the scheme had been instituted
for strike breaking purposes - and this has been the popular
view since.Livesey denied it.Despite sharp comments at the
'Interview'- 'we intend to have some protection out of
it'-nowhere else does he refer to an
immediate strike breaking
purpose.He continued to tell the men
that the purpose of the scheme was
to purchase their interest.The preamble to the rules say: 'to induce all employees
to take a real interest in the work and to give a
new motive for endeavouring to promote
the prosperity of the Company'.

A more detailed analysis
of his motives was given by Livesey in 1899 in a paper given to
the Newcastle-on-Tyne Industrial Remuneration
Conference.Having talked about the
sliding scale

and elements of
partnership to be achieved through it with customers and
shareholders, he continued ... 'two objects of equal
importance have always been kept in view, to
attach the workmen to the Company by giving them
a direct interest in its prosperity beyond
their salaries and wages, and to give them an
opportunity to practise thrift and thus
improve their position in life, to make provision
for misfortune and old age. In short to
enable them to lift themselves from poverty to
independence. '

Thus the aspirations of
the scheme can be first of all seen clearly in terms of
Livesey's general thesis of partnership of the various elements
necessary in the gas industry - capital, labour and customers.This is carried on to the idea that workers
should be involved in the
industry in which they work and that this could only be achieved through
incentives making them not only partners, but willing ones.Because of their debased positions they must
be helped, to achieve that
respectability which has given the middle classes a commitmentto both the economic status quo and a more generalised patriotic
ideal. If this could be achieved not only did the Company gain in having
the loyal workforce but the general political ideals of capital could be assisted
in a group of workers interested in what is 'good for England' -
and could only re-bound to re-inforce the position of
independent gas companies.

The key phrase is
'attaching men to the Company".The
idea thatthey were to be merely
prevented from striking is too limited. It has more to do with
Livesey's interpretation of the changes which had come about in society and
his methods of reconciliation.Livesey talked about 'the old
friendly relations' when business relations between master and man were
based on personal relations rather than mutuality of
interest'.Coupled with this analysis
of changes in industry were his own
memories of how South Met. had seemed in his boyhood - the small
works on the edge of the city, the banks of the Surrey Canal overgrown
with flowers and full of fish.To attach the men to the
Company' meant to some extent a re-creation of the relationships which
he thought had existed in that smaller industrial world.But the initiative must come from the
employers. 'It seems to be that the
employers have to choose between the division of
the industrial host intotwo hostile camps .....
and partnership'.

This attachment which the
workers should feel for the Company, said Livesey, must spring from
a feeling of ownership - of investment in and partnership in - both
the Company and the nation. 'the great weakness of
this Country is that our great working population
have no share in its vast accumulated property,
discontent will grow until it becomes a real
danger to the state'.

As London grew with its
industries, gas companies were employing a larger and more
diversified body of labour - rather than the small localised workforce of the
1840s.Many workers were seasonal with
the uncertainties that that
brought.George Livesey not only wanted
to save the industry from
strikes but hoped to make the workforce that God-fearing property
owning elite which would have enough commitment to the industry to back it
politically against muncipalisers and be worthy participants in a
community in which the gas industry was able to serve and to prosper.